No. 61082 

FILED 

JUL 1 0 2014 

TRACIE K. LINDEMAN 

RT 

130 Nev., Advance Opinion 55 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

LOUIS MORRISON, 

Appellant, 

vs. 

HEALTH PLAN OF NEVADA, INC.; 

SIERRA HEALTH SERVICES, INC.; 

SIERRA HEALTH AND LIFE INSURANCE 

COMPANY, INC.; SIERRA HEALTH-CARE 

OPTIONS, INC.; UNITED HEALTHCARE 

INSURANCE COMPANY; AND UNITED 

HEALTHCARE SERVICES, INC., 

Respondents. 

Appeal from a district court order dismissing a tort action. 

Eighth Judicial District Court, Clark County; Rob Bare, Judge. 

Affirmed. 

Kemp, Jones & Coulthard, LLP, and Will Kemp and Eric M. Pepperman, 

Las Vegas, 

for Appellant. 

Holland & Hart, LLP, and Constance L. Akridge and Matthew T. Milone, 

Las Vegas; Bryan Cave LLP and Lawrence G. Scarborough, J. Alex 

Grimsley, and Meridyth M. Andresen, Phoenix, Arizona, 

for Respondents. 

McDonald Carano Wilson LLP and Debbie A. Leonard and Seth T. Floyd, 

Las Vegas; Crowell & Moring LLP and Arthur N. Lerner and April N. 

Ross, Washington, D.C., 

for Amicus Curiae America's Health Insurance Plans, Inc. 

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Matthew L. Sharp, Ltd., and Matthew L. Sharp, Reno; Gillock & Killebrew 

and Gerald I. Gillock and Nia C. Killebrew, Las Vegas; Edward M. 

Bernstein & Associates and Patti S. Wise and Gary W. Call, Las Vegas; 

Friedman Rubin and Richard H. Friedman and William S. Cummings, 

Bremerton, Washington, 

for Amid Curiae Dolores J. Cappetto, Carole Grueskin, James London, 

Rodolfo Meana, and Dorothy Rogers. 

Fennemore Craig Jones Vargas and James L. Wadhams and Alexis L. 

Brown, Las Vegas, 

for Amicus Curiae Nevada Association of Health Plans. 

BEFORE THE COURT EN BANC.' 

OPINION 

By the Court, HARDESTY, J.: 

In this appeal, we are asked to determine whether a Medicare 

beneficiary's state common law negligence claim against his private health 

insurance company, through which he is receiving his Medicare benefits, 

is preempted by the federal Medicare Act. Because we conclude that state 

common law negligence claims regarding the retention and investigation 

of contracted Medicare providers are expressly preempted by the Medicare 

Act, we affirm the district court's order. 

FACTS AND PROCEDURAL HISTORY 

Respondents Health Plan of Nevada, Inc.; Sierra Health 

Services, Inc.; Sierra Health and Life Insurance Company, Inc.; Sierra 

'The Honorable Ron Parraguirre, Justice, voluntarily recused 

himself from participation in the decision of this matter. 

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Health-Care Options, Inc.; United Healthcare Insurance Company; and 

United Healthcare Services, Inc. (collectively, HPN) are health insurance 

businesses that specialize in health maintenance and/or managed care. 

They are engaged in the joint venture of providing insurance, including 

providing medical services to Medicare beneficiaries through the 

administration of Medicare Advantage (MA) Plans. Appellant Louis 

Morrison is a Medicare beneficiary who received his Medicare benefits 

through an MA Plan offered by HPN. Under HPN's insurance contract, 

Morrison was required to seek medical care from providers chosen by 

HPN. Since at least 2004, HPN had contracted with the Endoscopy 

Center of Southern Nevada, the Gastroenterology Center of Nevada, and 

the doctors employed or associated with the Gastroenterology Center of 

Nevada (collectively, the Clinic) 2In 2006, Morrison was treated by the 

Clinic based on its status as a contracted provider for HPN; as a result of 

his treatment there, he became infected with hepatitis C. 

Morrison's second amended complaint alleged that HPN 

breached its duty to "use reasonable care to select its health care 

providers" and "to inquire into the medical practices at the clinic" and was 

negligent in directing him to seek treatment at the Clinic. 3The complaint 

2It appears that HPN contracted with the Clinic prior to 2004, but 

the record fails to reveal the commencement date of the contract. 

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3Morrison's original complaint contained allegations that HPN failed 

to monitor medical practices at the Clinic and that it violated NRS 

Chapter 695G, which establishes Nevada's quality assurance program. 

HPN filed a motion to dismiss the claim as preempted by federal law. The 

district court agreed the claim was preempted, but it granted Morrison 

leave to amend the complaint. In his first amended complaint, Morrison 

still alleged a failure to monitor the Clinic but removed any references to 

the Nevada statutes. HPN filed another motion to dismiss based on 

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alleged that HPN failed to properly investigate the Clinic and knew or 

should have known that since at least 2004 the Clinic engaged in unsafe 

medical practices causing a high risk of transmission of blood borne 

pathogens, such as hepatitis C, to patients at the Clinic The district court 

ultimately dismissed Morrison's second amended complaint with 

prejudice, finding that Morrison's claim was preempted by the federal 

Medicare Act pursuant to this court's decision in Pacificare of Nevada, Inc. 

v. Rogers, 127 Nev. , 266 P.3d 596 (2011). Morrison argues on appeal 

that the district court erred in applying Rogers to dismiss his claim 

because the Medicare Act's preemption statute does not apply to his state 

common law negligence claim. 

DISCUSSION 

To resolve this appeal, we must determine whether state 

common law negligence claims against Medicare plan providers are 

preempted by the federal Medicare Act. 4The Medicare Act, enacted as 

Title XVIII of the Social Security Act and codified at 42 U.S.C. §§ 1395- 

1395kkk (2012), "creates a federally subsidized nationwide health 

...continued 

preemption. The district court again agreed that the claim was preempted 

because, despite the removal of references to the Nevada statutes, the 

claim was still one for negligent implementation of a quality assurance 

program. But the district court once again allowed Morrison to amend his 

complaint. 

4The dissent discusses at length, and cites to cases as well as the 

Restatement (Second) of Torts, the proposition that one can sue an HMO 

for negligence in its selection and retention of its providers. However, the 

majority of the cases cited by the dissent involve a hospital's duty of care, 

not an HMO's duty of care. Moreover, none of these cases involve 

Medicare preemption, which is the issue in this case. 

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insurance program for elderly and disabled individuals." Rogers, 127 Nev. 

at , 266 P.3d at 598. Pursuant to Part C of the Act, beneficiaries may 

receive Medicare benefits through MA plans provided by private entities 

called MA organizations. Id. (citing 42 C.F.R. § 422.2 (2010)). 

"MA Organizations and their plans contract with, and are 

subject to extensive regulation by, the Centers for Medicare and Medicaid 

Services (CMS)." Id.; see, e.g., 42 U.S.C. § 1395w-26(b)(1) (2012). 

Importantly, each MA organization that maintains one or more MA plans 

is required to adhere to a federally regulated quality improvement 

program. 42 C.F.R. § 422.152(a) (2013). The regulations specifically 

require that the MA organization "[Inlake available to CMS information 

on quality and outcomes measures that will enable beneficiaries to 

compare health coverage options and select among them." Id. 

§ 422.152(b)(3)(iii). The quality improvement program also requires that 

each MA organization "have written policies and procedures for the 

selection and evaluation of providers." Id. § 422.204(a). An MA 

organization must also ensure that each physician or other health care 

professional be initially credentialed by review of verified "licensure or 

certification from primary sources, disciplinary status, eligibility for 

payment under Medicare, and site visits as appropriate." Id. 

§ 422.204(b)(2)(i). 

Although CMS does not directly select the physicians or 

facilities that are included in an MA plan's network, federal regulations 

require an MA organization to select and retain only those providers that 

meet the qualifications specified in the Medicare Act. See id. § 422.204(b). 

Furthermore, CMS has specified "requirements for relationships 

between ... MA organizations [ I and the physicians and other health care 

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professionals and providers with whom they contract to provide services to 

Medicare beneficiaries enrolled in an MA plan." Centers for Medicare & 

Medicaid Services, Medicare Managed Care Manual, Ch. 6, § 10 (Rev. 24, 

June 6, 2003). 

Morrison's common law negligence claim is expressly preempted by the 

Medicare Act 

The Medicare Act contains an express preemption clause 

which states that 

[t]he standards established under this part shall 

supersede any State law or regulation (other than 

State licensing laws or State laws relating to plan 

solvency) with respect to MA plans which are 

offered by MA organizations under this part. 

42 U.S.C. § 1395w-26(b)(3) (2012). The scope of this preemption statute is 

very broad, and the "MA standards set forth in 42 CFR 422 supersede any 

State laws, regulations, contract requirements, or other standards that 

would otherwise apply to MA plans," with the exception of laws relating to 

licensing and plan solvency. Medicare Managed Care Manual, Ch. 6, § 

30.1 (Rev. 101, August 18, 2011). "In other words, unless they pertain to 

licensure and/or solvency, State laws and regulations that regulate health 

plans do not apply to MA plans offered by MA organizations." Id. 

When Congress explicitly conveys its intent to preempt in a 

statute, express preemption exists. Rolf Jensen & Assocs., Inc. v. Eighth 

Judicial Dist. Court, 128 Nev. „ 282 P.3d 743, 746 (2012) ("The 

preemption doctrine emanates from the Supremacy Clause of the United 

States Constitution, pursuant to which state law must yield when it 

frustrates or conflicts with federal law."). "When a federal act contains an 

express preemption provision, this court's primary task is to 'identify the 

domain expressly pre-empted by that language." Rogers, 127 Nev. at , 

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266 P.3d at 600 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 484 (1996)). 

In doing so, we must 'focus on the plain wording of the clause, which 

necessarily contains the best evidence of Congress' pre-emptive intent." 

Id. (quoting CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993)). 

Even when there is no statutory language expressly preempting state law, 

preemption may be implied if Congress intended to thoroughly occupy the 

field or when the federal law conflicts with state law. Rolf Jensen, 128 

Nev. at , 282 P.3d at 746. "Whether state law claims are preempted by 

federal law is a question of law that we review de novo, without deference 

to the findings of the district court." Id. 

With respect to Medicare Act preemption, we previously 

considered this clause in Rogers. 127 Nev. at , 266 P.3d at 600. In that 

case, the plaintiff filed suit against Pacificare, her Medicare provider, for 

injuries resulting from treatment she received at a Pacificare-approved 

facility under its MA plan. Id. at , 266 P.3d at 598. Similar to this 

case, the plaintiff asserted that Pacificare was liable for her injuries 

because it neglected to employ a proper quality assurance program Id. 

We did not address whether her claims were preempted by the Medicare 

Act, however, because Pacificare argued that an arbitration provision 

included in the parties' contract governed, necessitating dismissal of 

plaintiffs claims, and thus the question before us was whether Nevada's 

common law unconscionability doctrine is preempted by the Medicare Act. 

In resolving that issue, we considered the express language 

and legislative history of the Medicare Act's preemption provision. Id. at 

, 266 P.3d at 600-01. We stated that "[p]rior to 2003, Congress 

recognized a presumption against preemption unless a state law was in 

conflict with a Medicare requirement or fell within one of four express 

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categories of preempted standards." Rogers, 127 Nev. at , 266 P.3d at 

601. We then noted, however, that the 2003 amendment of the Act 

broadened the preemption coverage by stating that state laws are 

presumed to be preempted unless the law in question falls within two 

specific categories: state licensing requirements or state laws related to 

plan solvency. Medicare Program; Establishment of the Medicare 

Advantage Program, 69 Fed. Reg. 46866, 46904 (proposed Aug. 3, 2004) (to 

be codified at 42 C.F.R. pt. 417 and 422); see Rogers, 127 Nev. at , 266 

P.3d at 601. Thus, we concluded that the "legislative history shows that 

the Act's preemption provision has been specifically amended to include 

generally applicable common law." Rogers, 127 Nev. at 

601; see Estate of Ethridge v. Recovery Mgmt. Sys., Inc., 

, 266 P.3d at 

P.3d , 

No. 1 CA-CV-12-0740, 2014 WL 1911006, at *4 (Ariz. Ct. App. May 13, 

2014) ("The amendment was intended to 'clarif[y] that the MA program is 

a federal program operated under Federal rules. State laws, do not, and 

should not apply, with the exception of state licensing laws or state laws 

related to plan solvency." (alteration in original) (quoting H.R. Rep. No. 

108-391, at 557 (2003), reprinted in 2003 U.S.C.C.A.N. 1808, 1926)). 

Thus, as we concluded in Rogers, the Medicare preemption 

statute "demonstrates a legislative intent to broaden the preemption 

provision beyond those state laws that are simply inconsistent with 

enumerated categories of standards." Rogers, 127 Nev. at 266 P.3d at 

601. Therefore, 'all [s]tate standards, including those established through 

case law, are preempted to the extent they specifically would regulate MA 

plans.'" Id. (alteration in original) (quoting Do Sung Uhm v. Humana, 

Inc., 620 F.3d 1134, 1156 (9th Cir. 2010) (internal quotations omitted)). 

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Federal standards exist regarding the conduct at issue in Morrison's 

common law negligence claim 

Morrison argues that Congress intended for state laws and 

regulations to be preempted only when an express Medicare standard 

exists. And because no published Medicare standard exists that would 

supersede his common law negligence claim that HPN negligently directed 

him to receive treatment at the Clinic, he contends, the district court erred 

in concluding that it was expressly preempted. We disagree. 

We have already concluded that a state law need not be 

"inconsistent" with the federal standard to be preempted, but rather, as 

long as a federal standard exists regarding the conduct at issue "all fs] tate 

standards, including those established through case law, are preempted to 

the extent they specifically would regulate MA plans." Rogers, 127 Nev. at 

, 266 P.3d at 601 (alteration in original) (emphasis omitted) (quoting 

Do Sung Uhm, 620 F.3d at 1156). But even if we accepted Morrison's 

argument that state law claims are preempted only where express 

Medicare standards exist, Morrison's claim would be preempted. "While 

the term 'standard' is not defined in the Act, 'a "standard" within the 

meaning of the preemption provision is a statutory provision or a 

regulation promulgated under the Act and published in the Code of 

Federal Regulations." Id. at 600 (quoting Do Sung Uhm, 620 F.3d at 1148 

n.20). 

As noted above, CMS has promulgated regulations for MA 

organizations to adhere to when selecting and contracting with providers 

for its MA plans. See, e.g., 42 C.F.R. § 422.4(a)(1)(i) (2013) (providing that 

CMS will approve the network of providers to confirm that all federal 

standards, including quality of care, are being met); id. § 422.204 (setting 

forth the general standards for MA organizations regarding "[pirovider 

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selection and credentialing"); id. § 422.152(a) (requiring MA organizations 

to maintain quality improvement programs for each MA plan, which must 

include ongoing evaluation and quality assessment); id. § 422.152(f)(3) 

(requiring that "[for each plan, the organization must correct all problems 

that come to its attention through internal surveillance, complaints, or 

other mechanisms") 

CMS has specified "requirements for relationships 

between. . . MA organizations H and the physicians and other health care 

professionals and providers with whom they contract to provide services to 

Medicare beneficiaries enrolled in an MA plan." Centers for Medicare & 

Medicaid Services, Medicare Managed Care Manual, Ch. 6, § 10 (Rev. 82, 

April 27, 2007). In particular, 

Fain MA organization's site visit policy must 

include procedures for detecting deficiencies and 

have mechanisms in place to address those 

deficiencies.. . . The MA organization must 

develop and implement policies that address the 

ongoing monitoring of sanctions and grievances 

filed against health care professionals. . In the 

event that an MA organization finds an incidence 

of poor quality or any type of sanction activity 

against a health care professional, it should 

intervene and correct the situation appropriately. 

Id. § 60.3. Furthermore, in interpreting its regulations, CMS has stated 

that state laws which "set forth ongoing marketing, quality assurance, or 

network adequacy requirements for MA plans" are preempted. Id., Ch. 10, 

§ 30.1. 

Thus, federal law provides standards that MA organizations 

must adhere to in conducting the relationship with their contracted 

providers. A state law action asserting that HPN was negligent in 

directing its insureds to the Clinic could result in the imposition of 

10 
additional state law requirements on the quality assurance regime 

regulated by CMS. Thus, we conclude that even if the Medicare 

preemption provision applied only when express Medicare provisions exist, 

Morrison's state common law negligence claims would still be preempted. 

See Rogers, 127 Nev. at , 266 P.3d at 601. 

The dissent argues that the federal regulations we cite do not 

immunize providers from liability and "fain ] to touch on the generally 

applicable negligence claim at issue here." Dissenting opinion post. at 7. 

The dissenting justices' argument maintains that the minimum standards 

do not immunize providers from liability without exploring why they are 

not standards that "supersede any State law or regulation (other than 

State licensing laws or State laws relating to plan solvency) with respect 

to MA plans." 42 U.S.C. § 1395w-26(b)(3) (2012). 

Furthermore, the dissent mischaracterizes the nature of 

Morrison's claim, referring to it as a "negligent selection claim." 

Dissenting opinion post. at 2. Certainly, Morrison's second amended 

complaint stated that HPN failed "to use reasonable care to select its 

health care providers" and "to inquire into the medical practices at the 

clinic." But our review of the record reveals that Morrison argued to the 

district court and to this court that he sought damages for HPN's 

negligence in directing its insureds to the Clinic after HPN became aware 

that patients undergoing procedures at the Clinic had contracted hepatitis 

C. Thus, Morrison's claim was not one of negligent selection, but rather, 

was based on HPN's failure to monitor its provider. This is a negligent 

quality assurance claim that is specifically covered by the federal 

regulatory scheme. Interestingly, the dissent admits that the Medicare 

standards we cite "might preempt Nevada's quality assurance standards, 

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established by NRS 695G.180," dissenting opinion post. at 6, yet the 

dissenting justices fail to distinguish why a common law claim based upon 

the same conduct would not be preempted. Even assuming that the claim 

is not directly related to quality assurance, as we noted earlier in this 

opinion, supra at 10, Medicare has established standards that broadly 

regulate an MA organization's conduct and relationship with the providers 

to whom it sends its insureds, and such regulations preempt Morrison's 

claim related to that relationship. See, e.g., 42 C.F.R. § 422.152(0(3) 

(requiring that "[for each plan, the organization must correct all problems 

that come to its attention through internal surveillance, complaints, or 

other mechanisms"). 

The Medicare Act's preemption clause applies to claims against MA 

organizations 

Morrison also argues that even if the Medicare Act's 

preemption provision applies to state common law negligence claims, it 

does not apply in this matter because his claim is asserted against his MA 

organization, not his MA plan. He claims that the Medicare Act 

preemption clause only expressly preempts "any State law or 

regulation . . . with respect to MA plans," and therefore the preemption 

statute does not apply to his claim against his MA organization. 42 U.S.C. 

§ 1395w-26(b)(3) (2012). In addition, he argues that this court has already 

held in Munda v. Summerlin Life & Health Insurance Co., 127 Nev. , 

267 P.3d 771 (2011), that a plaintiffs identical negligence claim is not 

preempted by ERISA and that the "with respect to" language in the 

Medicare Act should be interpreted in the same way as the language in 

ERISA which preempts state laws that "relate to" employee benefit plans. 

See 29 U.S.C. § 1144(a) (2012). 

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First, we look to the plain language of the Medicare Act's 

preemption provision which states that "[t]he standards established under 

this part shall supersede any State law or regulation . . . with respect to 

MA plans which are offered by MA organizations under this part." 42 

U.S.C. § 1395w-26(b)(3) (2012) (emphasis added). In looking at the plain 

language of the provision as a whole, we determine that because MA plans 

can only be offered by MA organizations, the two are linked such that a 

claim regarding one is necessarily a claim regarding both. Morrison would 

have no claim against HPN if not for the MA plan. Moreover, in Rogers 

we failed to see a distinction between a claim brought against the MA 

organization and a claim brought against the MA plan. 127 Nev. at 

n.4, 266 P.3d at 601 n.4 (IN] othing in the statutory text of the Act 

suggests that a state law or regulation must apply only to [an MA plan] in 

order to constitute a law "with respect to" an MA plan." (second alteration 

in original) (quoting Do Sung Uhm, 620 F.3d at 1150 n.25)). Finally, 

reading the statute in the way Morrison urges would lead to an absurd 

result, as the insured could simply name its MA organization, and not the 

MA plan, as the defendant in order to avoid preemption. We thus 

conclude that Morrison's argument regarding the language of the 

Medicare Act fails. 5 Las Vegas Taxpayer Accountability Comm. v. City 

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5Morrison additionally argues that his case is distinguishable from 

Rogers because the negligence common law under which he is bringing his 

claim does not regulate MA plans, only the corporate choices of his 

insurer. We reject this argument, as the conduct identified in Morrison's 

common law negligence claim is the same conduct that is specifically 

regulated by the Medicare Act. As such, if Morrison is allowed to argue 

that a different state standard should be applied to the MA organization, 

the federal regulation of MA plans would be frustrated, and we must yield 

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Council of Las Vegas, 125 Nev. 165, 177, 208 P.3d 429, 437 (2009) 

("[W hen interpreting a statute, the language of the statute should be 

given its plain meaning. . . ."). 

We also conclude that Morrison's argument regarding our 

interpretation of the preemption clause in ERISA fails to support his 

position. Morrison relies upon Munda v. Summerlin Life & Health 

Insurance Co., 127 Nev. , 267 P.3d 771, 776 (2011), where this court 

ultimately determined that the insureds' claim that their insurer was 

negligent in failing to comply with quality assurance standards was not 

preempted by ERISA. In Munda, we discussed that generally "ERISA 

preempts [state] suits that are predicated on administrative decisions 

made in administering an ERISA plan," which include decisions regarding 

the selection and retention of providers. 127 Nev. at , 267 P.3d at 775. 

However, we concluded that the plaintiffs' claim was not preempted 

because they alleged facts to show that their insurer/managed care 

organization (MCO) was not acting in its capacity as an administrator of 

the ERISA plan when it selected and oversaw its providers, but rather, in 

...continued 

to the federal law. See Rolf Jensen & Assocs., Inc. v. Eighth Judicial Dist. 

Court, 128 Nev. „ 282 P.3d 743, 746 (2012). 

Finally, Morrison argues that this case is distinguishable from 

Rogers because there is no risk of an inconsistent result by allowing his 

negligence claim to survive. Morrison reasons that if HPN is found 

negligent, it would not run afoul of any Medicare standard because there 

is no standard that allows an HMO to direct an insured to a provider it 

knows or should know uses unsafe practices. This argument is 

unavailing. The concern in Rogers, that federal and state standards will 

differ and lead to inconsistent results, is applicable here. See Pacificare of 

Nev., Inc. v. Rogers, 127 Nev. , 266 P.3d 596, 601 (2011). 

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its independent role as an insurer. 127 Nev. at , 267 P.3d at 776. 

Thus, the duty on which the claim was based existed outside of the 

insurer's relationship with the ERISA plan. Id. 

Morrison contends that his case is analogous to Munda 

because HPN contracted with its providers in its independent role as 

insurer, not in its special capacity as an MA organization. All of its 

insureds were directed to use its providers, whether they were under a 

Medicare plan or not. However, Morrison's argument fails because ERISA 

and Medicare are fundamentally different programs and cannot be 

analyzed in the same way. Unlike ERISA, the Medicare Act has 

established standards that regulate an MA organization's selection of 

providers and implementation of a quality assurance regime. No state law 

may intercede in that regime. The ERISA program does not have 

analogous standards regulating the insurers for quality assurance. 

CONCLUSION 

The Medicare preemption provision contained in 42 U.S.C. § 

1395w-26(b)(3) is very broad, and we have previously determined that it 

applies beyond those state laws that are simply inconsistent with the 

express standards set out in the Medicare Act: it preempts all state 

standards to the extent that they would regulate MA plans, other than 

laws and regulations related to licensing and plan solvency, including 

those established through case law. Rogers, 127 Nev. at , 266 P.3d at 

601. Morrison's state law negligence claim would seek to regulate how 

contracted providers for MA plans are monitored, and thus, Morrison's 

claim is expressly preempted by 42 U.S.C. § 1395w-26(b)(3). And 

Morrison's arguments on appeal do not provide any basis for finding that 

his claims fall outside of the Medicare preemption provision. Accordingly, 

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J. 

J. 

J. 

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for the reasons set forth in this opinion, we affirm the district court's order 

dismissing Morrison's state common law negligence action. 

J. 

Hardesty 
CHERRY, J., with whom GIBBONS, C.J., agrees, dissenting: 

Today the majority holds that federal statutes and regulations 

preempt a Medicare recipient's claim against his Medicare Advantage 

organization for negligently selecting and retaining a contracted provider 

who infected the Medicare recipient with hepatitis C. It does so for two 

reasons: (1) Medicare regulations already set forth standards covering 

Medicare Advantage organizations' selection of contracted providers; and 

(2) any state tort law imposing a duty of care in selecting contracted 

providers would constitute a state law "with respect to" Medicare plans, 

which is expressly preempted under 42 U.S.C. § 1395w-26(b)(3). I 

respectfully dissent because I disagree with both rationales. 

Medicare Advantage 

As explained by the majority, Medicare Part C created the 

Medicare Advantage program, whereby health insurance organizations 

may contract with Medicare to provide federally subsidized health plans to 

Medicare enrollees. Medicare's regulatory agency, CMS, refers to these 

health insurance organizations (which can be health maintenance 

organizations, preferred provider organizations, religious fraternal benefit 

plans, or other organizations) as Medicare Advantage (MA) organizations. 

MA organizations can be private entities that also offer health 

plans apart from the Medicare plans. MA organizations operate just as 

any non-Medicare health insurance organization would operate. For 

example, MA HMOs, like non-Medicare HMOs, contract with a network of 

providers to provide medical services. Health Plan of Nevada (HPN) is an 

HMO that also offers a Medicare Advantage plan. 

CMS comprehensively regulates the MA plans offered by MA 

organizations. It approves the MA organizations' advertising materials, 

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the providers with whom the organizations contract, and the terms of 

those contracts. It requires that MA organizations implement quality 

improvement programs. And it also requires that MA organizations 

establish grievance procedures, which enrollees may use to complain about 

the services offered by an MA organization and its providers. 

Negligent selection claims 

As an HMO, HPN contracted with and directed its insureds to 

a particular provider that, appellant Louis Morrison asserts, HPN knew or 

should have known was dangerous and unsafe. Morrison's claim against 

HPN for negligent selection and retention of a contracted provider is not a 

novel claim. 1The following analysis of negligent selection claims will 

provide a useful background for preemption analysis. 

Negligent selection and retention claims are based on the 

theory that, when an HMO holds out a physician as competent by making 

that physician a contracted provider, the HMO's failure to investigate the 

physician's skill and qualifications creates a foreseeable and unreasonable 

risk of harm to patients. 

An HMO's duty of care in selecting and retaining contracted 

providers evolved out of the hospital context, where hospitals must 

determine which physicians may practice at their facilities. See Barry R. 

'The majority states that "Morrison's claim was not one of negligent 

selection, but rather, was based on HPN's failure to monitor." Majority 

opinion ante at 11. But the second amended complaint alleges that 

"Defendants owed a duty to Plaintiff. . . to use reasonable care to select its 

health care providers" and that "Defendants breached this duty by failing 

to direct the Plaintiff to seek medical care at reasonably safe facilities." In 

these statements Morrison clearly alleges the duty and breach elements of 

a negligent selection claim. 

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Furrow, Managed Care Organizations and Patient Injury: Rethinking 

Liability, 31 Ga. L. Rev. 419, 457, 461-62 (1997). Courts have held that 

"the failure to investigate a medical staff applicant's qualifications for the 

privileges requested gives rise to a foreseeable risk of unreasonable harm 

and. . . a hospital has a duty to exercise due care in the selection of its 

medical staff." Johnson v. Misericordia Cmty. Hosp., 301 N.W. 2d 156, 164 

(Wis. 1981). In Moore v. Board of Trustees of Carson-Tahoe Hospital, 88 

Nev. 207, 495 P.2d 605 (1972), this court recognized both the changing role 

of the hospital and the concept of a hospital's "corporate responsibility for 

the quality of medical care." Id. at 211-12, 495 P.2d at 608. 

The Missouri Court of Appeals in Harrell v. Total Health Care, 

Inc., No. WD 39809, 1989 WL 153066, at *4-5 (Mo. Ct. App. Apr. 25, 1989), 

affirmed, 781 S.W.2d 58 (Mo. 1989), determined that HMOs have assumed 

a role sufficiently similar to that of a hospital to justify extending liability 

to HMOs. In that case, the court agreed with arguments that HMOs owe 

a duty of care to properly vet their contracted providers. The court 

reasoned that, in order for patients to realize the benefit of their health 

insurance, they must be treated by physicians approved by their plan. Id. 

at *5. In this arrangement "there is an unreasonable risk of harm to 

subscribers if the physicians listed ... include doctors who are unqualified 

or incompetent." Id. The court held that the presence of this risk gives 

rise to a duty owed by the insurance company to ensure that contracted 

physicians are qualified and competent. Id. 

Other courts have since upheld a plaintiffs ability to bring a 

negligent selection claim against an HMO. See Petrovich v. Share Health 

Plan of Ill., Inc., 696 N.E.2d 356, 360-61 (Ill. App. Ct. 1998) (holding that 

HMOs can be liable for "corporate negligence as a result of negligent 

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selection and control of the physician who rendered care"); McClellan v. 

Health Maint. Org. of Pa., 604 A.2d 1053, 1059 (Pa. Super. Ct. 1992) 

("HMOs have a non-delegable duty to select and retain only competent 

primary care physicians."). Some courts have also found that HMOs owe a 

duty of care in selecting contracted providers under the Restatement 

(Second) of Torts § 323 (1965), which states that 

[o]rie who undertakes, gratuitously or for 

consideration, to render services to another which 

he should recognize as necessary for the protection 

of the other's person or things, is subject to 

liability to the other for physical harm resulting 

from his failure to exercise reasonable care to 

perform his undertaking, if (a) his failure to 

exercise such care increases the risk of such harm, 

or (b) the harm is suffered because of the other's 

reliance upon the undertaking. 

See, e.g., McClellan, 604 A.2d at 1059. 

In this case, HPN is a Nevada-licensed HMO that selects and 

contracts with medical providers. Morrison should not be prevented from 

enforcing the duty of care that HPN may owe to him simply because 

Morrison is a Medicare recipient, while HPN's non-Medicare customers 

may do so. As explained below, no such unequal treatment is created by 

the Medicare Act's preemption clause. 

Preemption 

"When a federal act contains an express preemption provision, 

this court's primary task is to 'identify the domain expressly pre-empted 

by that language." Pacificare of Nev., Inc. v. Rogers, 127 Nev. 

266 P.3d 596, 600 (2011) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 

484 (1996)). Under the Medicare Act, the standards established by the 

federal Medicare statutes and regulations "supersede any state 

law .. . with respect to MA plans which are offered by MA organizations," 

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except for licensing and solvency requirements. 42 U.S.C. § 1395w26(b)(3) (2012); 42 C.F.R. § 422.402 (2013). Thus, to determine whether 

the domain is expressly preempted, one must consider (1) if there are 

federal standards superseding state negligent selection and retention law 

and (2) if negligent selection claims may result in laws "with respect to" 

MA plans 

Federal standards 

The majority states that lailthough CMS does not directly 

select the physicians . . . federal regulations require an MA organization to 

select and retain only those providers that meet the qualifications 

specified in the Medicare Act." Majority opinion ante at 5. The majority 

goes on to list several federal regulations that the majority contends 

preempt negligent selection claims. It reasons that such claims, although 

not necessarily inconsistent with the federal standards, "could result in 

the imposition of additional state law requirements on the quality 

assurance regime regulated by CMS." Id. at 10-11. I do not believe that 

those regulations create standards regulating the negligent selection of 

providers. 

The majority first points to 42 C.F.R. § 422.4(a)(1)(i), which 

states that an MA organization's "network [of providers] is approved by 

CMS to ensure that all applicable requirements are met, including access 

and availability, service area, and quality." Nevertheless, the fact that 

CMS approves of a provider's inclusion in the network does not mean that 

negligent selection claims against the MA organization are preempted. 

For instance, 42 C.F.R. §§ 416.1-200 creates standards regulating certain 

providers, but the existence of those standards does not make the 

providers immune to negligence suits. In fact, Medicare regulations 

specifically acknowledge that a Medicare provider may be sued for 

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malpractice. 42 C.F.R. § 424.530(a)(3)(i)(C) (2013) (stating that CMS may 

deny a provider's Medicare reenrollment if the provider is convicted of 

"[a]ny felony that placed the Medicare program or its beneficiaries at 

immediate risk (such as a malpractice suit that results in a conviction of 

criminal neglect or misconduct)"). Just as CMS's provider standards do 

not preempt providers' malpractice liability, CMS's approval of an MA 

organization's provider selection does not preempt MA organizations' 

negligence liability. 

The majority then considers 42 C.F.R. § 422.204(a), which 

states that "[a]n MA organization must have written policies and 

procedures for the selection and evaluation of providers. These policies 

must conform with the credential and recredentialing requirements set 

forth in paragraph (b) of this section and with the antidiscrimination 

provisions set forth in § 422.205." But the existence of minimum 

requirements for participation in Medicare Advantage does not preempt 

MA organizations' tort liability. Despite the existence of minimum 

procedural requirements, it is still the MA organization that "select[s] the 

practitioners that participate in its plan provider networks." 42 C.F.R. § 

422.205(a) (2013). It is that discretionary selection that Morrison alleges 

HPN negligently performed—a selection that an HMO such as HPN may 

also make in a non-Medicare capacity. 

Finally, the majority refers to the quality improvement 

program that CMS requires MA organizations to implement. See 42 

C.F.R. 422.152(a) (2013). I agree that this program might preempt 

Nevada's quality assurance standards, established by NRS 695G.180. 

And CMS's interpretation of its regulations says that states may not set 

forth ongoing quality assurance requirements. Medicare Managed Care 

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Manual, ch. 10, § 30.1 (Nov. 4, 2011). Yet CMS states in the same text 

that "[o]ther State health and safety standards, or generally applicable 

standards, that are not specific to health plans are not preempted." Id. 

§ 30.2. A general duty of care is just such a generally applicable 

standard. 2 

Thus, each federal standard cited by the majority fails to touch 

on the generally applicable negligence claim at issue here. In addition, 

any concern that tort liability may indirectly increase costs to MA 

organizations, thereby impacting their ability to comply with regulations, 

is irrelevant. The Supreme Court of the United States has stated, in the 

ERISA context, that state laws that are otherwise not preempted and that 

"affect only indirectly the relative prices of insurance policies, a result no 

different from myriad state laws in areas traditionally subject to local 

regulation," are not preempted. N.Y. State Conference of Blue Cross & 

Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 668 (1995). The 

same logic applies to this case. 

"With respect to" 

Even if federal regulations provided standards governing the 

negligent selection of providers, it is not clear that negligent selection 

2The majority argues that we do not distinguish conduct violating 

quality assurance requirements from conduct that might violate a duty of 

care. The distinction is obvious. An insurance organization violates NRS 

695G.180's quality assurance standards when it fails to establish the 

procedures and record-keeping that constitute a quality insurance 

program. An insurance organization breaches a general duty of care when 

it commits tortious acts against its customers. One set of conduct 

concerns procedures and paperwork; the other concerns actual negligent 

acts that cause injury. 

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liability creates state law "with respect to" MA plans. This court has 

interpreted similar language in the ERISA context. Under ERISA, all 

state laws that "relate to" certain employee benefit plans are expressly 

preempted. 29 U.S.C. § 1144(a) (2012). In Munda v. Summerlin Life & 

Health Insurance Co., 127 Nev. „ 267 P.3d 771, 773 (2011), the 

appellants argued that federal ERISA regulations did not "relate to" their 

claim for negligence, which alleged that the respondent "failed to identify 

the unsafe practices of or terminate its contract with the" provider. This 

court agreed, stating that ERISA's express preemption provision "does not 

preempt claims that are brought against Summerlin in its capacity as [a 

managed care organization], instead of in its capacity as an ERISA plan 

administrator." Id. at , 267 P.3d at 776. I believe that this case is 

analogous. 

Here, Morrison alleges that HPN committed negligence in its 

capacity as an HMO. In other words, Morrison alleges that HPN 

negligently selected an unsafe provider—an activity that an HMO may 

perform without any connection to Medicare Advantage. The fact that 

Medicare contracted to compensate HPN on behalf of Morrison does not 

change the fact that HPN, exercising the discretion afforded it under 

federal regulations, chose the provider. 

The majority contends that Munda is distinguishable because, 

in that case, "the plaintiffs' claim was not preempted because they alleged 

facts to show that their insurer. . . was not acting in its capacity as an 

administrator of the ERISA plan when it selected and oversaw its 

providers, but rather, in its independent role as an insurer." Majority 

opinion ante at 14-15. Yet this case is identical: HPN functions as a 

Nevada-licensed HMO by contracting with providers for medical care, 

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regardless of whether Medicare is involved. 3 See NRS 695C.030(6), (7) 

("Health maintenance organization' means any person which provides or 

arranges for provision of a health care service or• services and is 

responsible for the availability and accessibility of such service or services 

to its enrollees." "Provider' means any physician, hospital or other person 

who is licensed or otherwise authorized in this state to furnish health care 

services."). It shouldn't matter whether HPN is compensated by Medicare, 

by the enrollee, or by other sources. 

In sum, Medicare's standards do not cover general health and 

safety issues like negligence claims. Furthermore, under Munda, 

Morrison's claim for negligent selection of a provider is not "with respect 

to" Medicare and is therefore not expressly preempted. The Medicare 

'The majority also argues that, "[u]nlike ERISA, the Medicare Act 

has established standards that regulate an MA organization's selection of 

providers." Majority opinion ante at 15. As stated above, I do not agree 

that there are standards governing the selection of providers. CMS 

regulations state that "an MA organization . . . select[s] the practitioners 

that participate in its plan provider networks," subject only to 

nondiscrimination rules and the satisfaction of procedural requirements. 

42 C.F.R. § 422.205(a) (2013). 

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Act's text does not show that Congress intended the unequal result that 

Medicare enrollees cannot have legal recourse against a negligent HMO 

while non-Medicare patients may. Accordingly, I respectfully dissent. 

Gibbons 

J. 

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